Quite often a business will wish to utilize a name in its operations that is not the legal name of the individual owners or the entity that owns the business. For example, a restaurant owned by a corporation named Axiom, Inc. may operate several restaurants, one called “Ms Peggy’s Famous Foods” and another called, “Uncle Joe’s Pancakes.”
Those trade names and nomenclatures are considered fictitious business names since they do not name the owners or the actual entity operating the business.
This article shall describe the legal definition and requirements so that one may obtain…and protect…a fictitious business name.
The reader should also review our article on Limited Liability Entities.
The Basic Law and Procedure:
A fictitious business name is simply a name utilized by a business in its operations. It is often called a “DBA” for “doing business as” since if a legal document or pleading is filed, the method to describe the entity is “Axiom Corporation, Inc, a California corporation doing business as “Uncle Joe’s Pancakes.” It is vital to note that the fictitious business name does not create a new business entity…it is merely another name for the original entity using the name.
When John Doe or Company X does business as "ABC Corporation," they are conducting business under a Fictitious Business Name (FBN), or trade name. A Fictitious Business Name is any business name other than the person's full legal name, the legal name of the company, or any name which suggests additional owners ("John Doe and Company"). The term "doing business as" (which may be abbreviated as DBA, dba or d/b/a) is synonymous with a Fictitious Business Name.
Laws relating to Fictitious Business Names are found in the California Business and Professions Code (B&P Code) §§ 17900 - 17930.
To conduct business under a fictitious name, the person or company (the "Registrant") must file a Fictitious Business Name Statement (FBNS) with the Clerk of the county in which the principal place of business is located. [B&P Code §17910] If the Registrant does not have an office within California, the FBNS may be filed with the Clerk of Sacramento County. [B&P Code §17915]
Name Availability
Before filing for an FBN, it is the Registrant's responsibility to determine if the desired FBN is available. Many counties offer an online search tool of their databases. Otherwise, the Registrant may check name availability in person at a designated location(s), or may pay a slight fee to have the County Clerk check for them. If some other entity in the jurisdiction of the Registrant is already using the name, it may not be used without their consent.
Note that this means that one’s own fictitious business name is thus protected from future users once one registers and keeps the registration up to date. It is also the Registrant's responsibility to ensure their desired FBN is not already in use at the state and/or national levels by checking name availability with the Secretary of State and/or the U.S. Patents and Trademark Office (USPTO).
Registration
Presuming the desired FBN is available, most counties require the business to be registered before issuing it an FBN. There's a nominal registration fee, and the Registrant will have to pay any delinquent taxes, if any.
Once registration is current, the FBNS is filed with the County Clerk. The County Clerk returns an endorsed copy to the Registrant.
Publication Requirement
The Registrant must publish the endorsed FBNS in a newspaper of general circulation within the county. Most counties provide a list of approved newspapers. The endorsed FBNS must be published once a week for four consecutive weeks. The first publication must occur within 30 days from the date the FBNS was filed with the County Clerk. [B&P Code §17917)
After publication is complete, the Registrant has 30 days to file an original affidavit Proof of Publication with the County Clerk. Many newspapers include this service as part of their publication package.
Maintenance and Renewal
The FBNS generally expires five years from the date on which it was filed with the County Clerk. If, however, there is any change in the facts set forth in the statement, the FBNS expires in 40 days and the Registrant must file a new FBNS before expiration. [B&P Code §17920] An exception to the rule is a change in the residence address of the Registrant. This will not cause the FBNS to expire prior to the end of the 5-year term.
If no change has occurred in the facts in the original FBNS, the Registrant has 40 days from the expiration date to file a renewal without publishing the FBNS again. If no change has occurred but more than 40 days has lapsed from the expiration date, the FBNS is considered a "first filing" and must be published as before.
Penalties
Any person who executes or publishes any Fictitious Business Name Statement knowing that such statement is false in whole or in part, is guilty of a misdemeanor and upon conviction thereof shall be fined not to exceed one thousand dollars ($1,000). [B&P Code §17930]
Abandonment
If the Registrant ceases to conduct business under the FBN and it has been less than five years, the Registrant shall file a Statement of Abandonment. The procedure is essentially the same as registering a FBN: a statement is filed with the County Clerk who returns an endorsed copy which must then be published, and Proof of Publication filed with the County Clerk. [B&P Code §17922].
Practical Uses and Problems:
The main advantage of using the dba method is it allows a relatively quick and inexpensive way to utilize a name that others cannot take from you. Keep in mind that if you simply begin to use a name without registering it, anyone else can use the same name in most circumstances and you have no legal relief. Do read our article on patents, trademarks and copyrights.
That said, the scope of the protection is more limited in most circumstances than if an entity is created which has the name as its official names, e.g. the name of the LLC or corporation. Further, the various advantages to a limited liability entity that arise are not available simply by filing a fictitious business name.
It should be noted that limited liability entities, themselves, can file dba’s and often do. Thus, a single business could own half a dozen dba's for various aspects or locations of its business.
A typical problem that arises is the failure of companies to renew their dba's as described above. This can be particularly devastating if the business has existed with a good reputation for a decade or so and suddenly finds that another entity has registered the same name in the same locale and has demanded that the first company cease and desist from using its long established names. While defenses are available, the resulting litigation can be expensive and it is wise for the company registering its dba to also calendar its expiration date.